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Friday, August 19, 2016

Carl Icahn:"I Am More Hedged Than Ever,

A Day Of Reckoning Is Coming"

"I have hedges on, I'm more hedged than I ever was. I will tell you there's certainly good companies. The market is way overvalued at 20 times the S&P and I'll tell you why: a lot of it is a result of zero interest rates. It's just what I said. You have zero interest and a lot of buybacks. Money is not going into capital. So think of it as a rich family that just decides 'we're just going to have a lot of fun, we're going to sit around in the pool, and we'll keep printing up IOUs to the town, we've got a good name.' You keep doing it until you go broke. And this is what's happening in our economy. Zero interest rates are building huge bubbles. You have retirees that saved a million bucks, half a million bucks. I think the market is at literally very high levels because of zero interest rates, and if you really look at it, the dollar is pretty strong right now, which is going to hurt international earnings. The S&P, they live on international earnings. That's going to be hurt. There's going to be a day of reckoning here. I've seen it many times in my life. When things look good, they look great. You go into the sky. But that's when you have to really pull down and really stop buying. That being said, I'm not going to tell you it's going to happen tomorrow, next week, even next month, even next year possibly. But it's going to happen, andyou have to change the direction of our economy. I can't say it plainer than that."LINK HERE to the source

1 comment:

As Ben-Artzi explained, and as we’ve discussed numerous times over the years, the revolving door between Deutsche Bank and the SEC is so extensive that it’s hard to see it as an accident..

But as the Ben-Artzi case reveals, it’s even worse. As we wrote in June 2013 in Mary Jo White Institutionalizes Deutsche Bank Protection Racket at the SEC, the agency hired Robert Rice as its chief counsel. Rice had been head of governance, litigation and regulation for Deutsche Bank for the Americas. Ben-Artzi had filed an anti-discrimination suit against him and three others. Dick Walker, who had been the SEC’s head of enforcement from 1998 to 2001, left to join Deutsche Bank, later becoming its general counsel.Critically, Ben-Artzi describes a two-tier standard of enforcement. The key section from Ben-Artzi’s letter regarding the glaring conflicts of interest:

So why did the SEC not go after Deutsche’s executives? The most obvious concern is that Deutsche’s top lawyers “revolved” in and out of the SEC before, during and after the illegal activity at the bank. Robert Rice, the chief lawyer in charge of the internal investigation at Deutsche in 2011, became the SEC’s chief counsel in 2013. Robert Khuzami, Deutsche’s top lawyer in North America, became head of the SEC’s enforcement division after the financial crisis. Their boss, Richard Walker, the bank’s longtime general counsel (he left the bank this year) was once head of enforcement at the SEC.

This goes beyond the typical revolving door story. In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing.

This took place on the watch of Mary Jo White, the current chair of the SEC, whose relationship with Mr Khuzami and Mr Rice dates back 20 years. She bears ultimate responsibility for the Deutsche fine.

And to reiterate the point we made earlier: Khuzami and Rice recusing themselves from the Deutsche Bank investigation was a joke. Mary Jo White, per her endorsement of this revolving door and the SEC’s continued refusal to sanction executives at major firms, despite continuing pressure from the media and reform-minded legislators like Elizabeth Warren and Sherrod Brown, is clearly no supporter of enforcement that might shake up big banks or worse, highlight how badly she erred in accepting senior staff members from banks with more than a little air of sulphur about them. Any SEC employee with an operating brain cell would see that following a line of investigation that might implicate Khuzami or Rice would be a career-limiting move.

This case highlights an even bigger issue: the degree to which attorneys and other professionals are now in the business of providing cover for crooked behavior. In the stone ages of my youth, lawyers used to tell clients what the rules were, how close to the line they could go, and what would happen if they stepped over it. Now they seem mainly to be acting as professional liability shields. One way is via having outside firms rationalize questionable actions. The execs can say, “We relied on expert advice!” and they are off the hook. Benjamin Lawsky, the former Superintendent of Financial Services for the State of New York, started to tackle that issue by sanctioning outside consultants and law firms for providing liability cover in dodgy circumstances.The Deutsche Bank (and also Goldman) heavy-duty use of the revolving door is another protection racket.

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